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Midterm 2- Chapter 11 - Public Goods

Midterm 2- Chapter 11 - Public Goods - Chapter 11 Chapter...

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Chapter name Chapter 11 Public Goods and Common Resources
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Chapter 11 Study Checklist: Required reading : Chapter 11: whole chapter Online practice quiz questions : Chapter 11: #1-10
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Public Goods: When thinking about the various goods in the economy, it is useful to group them according to two characteristics: Is the good excludable? Is the good rival?
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Different Characteristics of G/S: The amount consumed by one person is unavailable for others to consume. Refers to the property of a G/S whereby 1 person’s use diminishes other people’s use. If 1 person uses or consumes part of the G/S: Does that decrease the value you get, or (ex: sharing your car)
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The Different Types of Goods: Note : Not all G/S are both excludable and rival in consumption. Not all G/S are neither excludable or rival in consumption. Different combinations of the two characteristics creates 4 types of G/S.
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4 Types of Goods: Both excludable and rival in consumption. Ex) Pizza, Elmo dolls, DDT, computers, beer, etc. Most G/S are private and produced by firms. Neither excludable nor rival in
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4 Types of Goods: Natural Monopolies – (least important of the 4) Is excludable, but not rival in consumption. Also known as a “quasi-public goods.” I don’t like the terms given for this good. Ex) satellite radio, cable service (but NOT Internet)
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Figure 1: This Chart is Confusing and Inaccurate! Riva l? Y e s Y e s Diet Dr. Thunder El mo Congested toll roads Fire protection ? Cable TV Uncongested toll roads N o Private Goods Natural Monopolies N o Excludabl e? Music at the bar The environment Congested nontoll roads Fire alarm Border defense ?
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